Headlines

Time

Why medical bills are killing us

Dozens of midpriced items were embedded with similarly aggressive markups, like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

Every time a nurse drew blood, a “ROUTINE VENIPUNCTURE” charge of $36.00 appeared, accompanied by charges of $23 to $78 for each of a dozen or more lab analyses performed on the blood sample. In all, the charges for blood and other lab tests done on Recchi amounted to more than $15,000. Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests. By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries.

On the second page of the bill, the markups got bolder. Recchi was charged $13,702 for “1 RITUXIMAB INJ 660 MG.” That’s an injection of 660 mg of a cancer wonder drug called Rituxan. The average price paid by all hospitals for this dose is about $4,000, but MD Anderson probably gets a volume discount that would make its cost $3,000 to $3,500. That means the nonprofit cancer center’s paid-in-advance markup on Recchi’s lifesaving shot would be about 400%…

Yet those who work in the health care industry and those who argue over health care policy seem inured to the shock. When we debate health care policy, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?

What are the reasons, good or bad, that cancer means a half-million- or million-dollar tab? Why should a trip to the emergency room for chest pains that turn out to be indigestion bring a bill that can exceed the cost of a semester of college? What makes a single dose of even the most wonderful wonder drug cost thousands of dollars? Why does simple lab work done during a few days in a hospital cost more than a car? And what is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?

Blowback

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The sure way to keep medical prices low is to have other people pay the bill, and have the person who’s getting the treatment have no idea how much it actually costs. Then prices will fall of their own weight.

People have gotten the idea that health care is something other people will pay for, and that there is no limit to how much you should get and how high the quality should be. The government and insurance companies absorb the costs, and there is no incentive at all for providers to lower prices.

If you subsidize something, either by government funding or all-encompassing employer-provided insurance, the price will go up. Always.

See also: higher education.

Start bringing market forces into the system again, and prices will drop. Good luck on that.

While Brill correctly outlines the problem in all its terrible mien, I feel like his proposed solutions are too pedestrian. They fail to break free of some key assumptions in a system designed to minimize the financial risk to its practitioners by maximizing financial risk to its patients. This trend seems to provide no material health benefit to its vulnerable clients.

There’s a lot of good information here. I think Brill misses an opportunity (in his enthusiasm for centrally-managed healthcare) to critique ubiquitous employer-based health insurance and to dig deeper into the reasons we are at so many removes from the actual payment of our medical (insurance) costs.

Notwithstanding my quibbles, I have observed the same things he mentions, and they fill me with fear, both personally and generally.

There is no panacea – end-of-life care is still a very hard topic, and will always be so. Heroic measures for loved ones and their inherently uncertain outcomes will always be wrenching. He touches gently on these topics, without digging into the real numbers – actual cost per capita for the expected (and in some cases, near-miraculous) care to which we have become accustomed.

I read the whole article. Very interesting, with some good questions, pertinent observations, and a couple of very glaring omissions.

A. Nowhere in the article was the huge discrepancy between “billed” prices and actual revenue captured by healthcare providers addressed. Look at your next “explanation of benefits” statement, and you’ll probably see a “bill” and a “payment” discrepancy, with payment often half (or even less) of the billed charges.

B. Unpaid bills & charity care is another large component. Over time, we have allowed the “system” to be twisted into “x service actually costs $1, but half our patients can’t pay it, so we’ll charge the ones who can $2″ or similar examples.

Healthcare does have huge amounts of $ flowing through it… but the answer isn’t to “demonize” hospitals & docs IMO (yes, I’m biased. So is this writer/magazine…)

Dozens of midpriced items were embedded with similarly aggressive markups, like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

So yes, the government pays a hospital about as much for a chest x-ray as one pays for an oil change. Makes perfect sense. /

Who do you THINK is paying for all of those who are treated with tests and medications whose cost is reimbursed at a bargain basement rate by Uncle Sam?

It’s always fun to return from a trip and tell healthcare wallahs how much it costs cash money/no insurance for equivalent or better care and Rx abroad. Gotta rub their overpaid, under-performing noses in it a bit.

When debating with Leftists I -still- get the adage that the “free market” has driven costs up in health insurance and health care, that it was the “wild west” with no regulation pre-ObamaCare. They seriously think this.

Virgina state law mandates what a physician can charge based on what ails you. I learned this the hard way when I had no insurance. I went to an extremely good doctor whose practice was to charge you the least amount possible if you had no insurance, and to gently edge you along to saying the right things. “No, if you tell me you have X then I have to charge you for a Level 4 (making this up as I don’t remember). I think you have Y, don’t you?”

Take the laws out of it and leave it up to the marketplace and watch the prices drop to what they should be when everyone gets sticker shock.

And of course people getting away with suing for everything under the sun.

And not everybody needs to have a private room in the hospital with 5 star service.
There’s nothing wrong with bargain basement prices for medical procedures & care.
That does not mean people will die. It just means they’re choosing what they’ll pay for.
But of course when it’s Uncle Sam footing the bill, many demand the pricey stuff bcs it’s not on their dime.

It’s always fun to return from a trip and tell healthcare wallahs how much it costs cash money/no insurance for equivalent or better care and Rx abroad. Gotta rub their overpaid, under-performing noses in it a bit.

Christien on February 22, 2013 at 12:34 PM

Wow, I bet you’re a patient doctors LOVE to see in their exam room. Just FYI, in many countries, doctors work during the day in government (taxpayer) subsidized clinics for next to nothing. Their “second day” begins after their gov’t work (say from 4-10p.m.) in their own fee-for-service office. This is so they can make a living.

Some doctors in the USA would go for this arrangement but it is against the law here.